A capital asset is defined as property of any kind held by an assessee. It need not be connected to the assesse’s business or profession. The term encompasses all kinds of property, movable or immovable, tangible or intangible, fixed or circulating. Land and building, plant and machinery, motorcar, furniture, jewellery, route permits, goodwill, tenancy rights, patents, trademarks, shares, debentures, mutual funds, zero-coupon bonds are some examples of what is considered capital assets.

Excluded from the definition

Specific common definitions

US tax definition versus broader economic definition

In their textbook on the financial accounting, authors Clyde P. Stickney and Roman L. Weil advise that the term should be avoided except in tax accounting in the US private context, to counter its usage in other contexts vaguely. For example, it is often used as a synonym for fixed assets or for investments in securities. Several public sector standards in global use, notably triple bottom line accounting as defined by ICLEI for world cities, require that employees or the environment or something else be treated as a capital asset. In this context, it means managers have a responsibility to maintain, and to report changes in value as gains or losses of the capital assets. Capital assets should not be confused with the capital a financial institution is required to hold. This capital is computed from the right-hand side of the balance sheet while assets are found on the left-hand side.